The Great Depression
by
[Macmillan, $3.00]
WHEN the passing of time shall have made feasible the writing about existing conditions with greater perspective than is now possible, Professor Lionel Robbins of the University of London will receive credit for having made a sincere effort at detached and realistic appraisal even amid the ruins. He is not a friend of a planned economy; he says so frankly and modestly, and gives his reasons. All he wants is that States should abstain from those forms of intervention in the economic field which analysis shows to be definitely harmful.
His real theme is the period between 1929 and 1933. The acute misery these years had its background in the World War, but the real cause, which need not have been, was failure to heed at the proper time the warning of such men as Dr. Adolph C. Miller, of the Federal Reserve Board, who began as early as 1925 to plead in vain for a stay of the easy money policy of that Board. Faced with a choice of raising rediscount rates, slowing up business and holding down speculation, and lowering interest rates and encouraging both, the Board in 1927 deliberately chose the latter. The author admits, though, that this policy loosened London, and that was one objective. The inflation which followed gave us a glimpse of glory, even though the consequent deflation laid us very low. For the financial freebooter of the 1920’s Professor Robbins has nothing but contempt.
The author’s preference for freedom under the law rather than for a rigidly planned economy rests upon his belief that more people will keep dry if all are left free to vote daily for umbrellas at $4.00 apiece or against them at $5.00 than if everybody must vote one year for Smith for Umbrella Manager running on a platform of more umbrellas and then turn him down the next in favor of Jones, who stands for destroying the surplus produced under the Smith régime.
The whole world has been sick — and still is, for the economic doctors have cured it near unto death. The patient is more nearly exhausted by his treatment than by the malady. The healers have lanced blisters deeply, and pricked boils lightly, and rubbed knees gingerly when they ought to have yanked out teeth. But is there no balm in Gilead? None. It will take strong medicine and internal remedies. Health may only be restored by scrapping insane self-contained nationalism, lowering unconscionably high tariffs, doing away with quotas and restrictive measures, and resorting again to that international division of labor which, though far from perfect, once brought us the highest per capita real wealth ever yet enjoyed.
The initial step is for each country to define its monetary unit in a fixed amount of gold, to the end that the citizens of one country may measure their own money against that of the citizens of all others, and thus begin to trade. This means the gold standard, and that in brief is Professor Robbins’s story.
HOWARD DOUGLAS DOZIER